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State Name: New Jersey
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State Abbreviation: NJ
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MND NewsWire features plain and simple interpretations of industry related data and events written in a manner that maintains the interest of random readers while still catering to the perspective of a housing market professional.

Countrywide Financial Corporation logged in on Tuesday with its third consecutive quarterly loss due to a sharp increase it its provision for loan losses.

Countrywide reported that it lost $893 million or $1.60 per share during the first quarter of 2008. One year ago the quarterly earnings were $434 million or $0.72 per share. Most analysts were projecting earnings of $0.02 per share.

Countrywide said it has set aside $1.5 billion to cover impending loan losses. It charged off loans that were deemed unrecoverable in the amount of $606 million during the first quarter. One year ago charge-offs totaled $39 million. The bank said that 35.9 percent of its subprime loans were delinquent at the end of the quarter compared to 33.6 at the end of the fourth quarter. Delinquencies in conventional loans rose from 5.76 percent to 6.48 percent.

In January, facing widening losses from its concentration on subprime mortgages and teetering on the edge of bankruptcy, Countrywide agreed to sell itself to Bank of America for about $4 billion in stock. A few months earlier Bank of America invested $2 billion in Countrywide's stock to shore up the smaller bank's capital. Bank of America is now reporting large losses of its own, but maintains in intends to proceed with the Countrywide deal.

On Tuesday the Nashville Business Journal reported that Bank of America is planning to modify or otherwise work out some 265,000 Countrywide loans, allowing those customers to stay in their homes.

The troubled loans that Bank of America has targeted for workout after it closes on the Countrywide deal in the third quarter total at least $40 billion.

Under its current policy Bank of America allows tenants living in properties facing foreclosure to remain in their homes for 60 days after the actual sale but will pay them $2000 to defray the costs of moving and locating new housing if they leave the foreclosed property voluntarily within 30 days of completion of foreclosure proceedings. Bank of America said it will continue this policy as it takes over the Countrywide portfolio. The companies' combined national consumer-mortgage headquarters will be located in Calabasas, California, Countrywide's home. Bank of America is based in Charlotte North Carolina.

Bank of America also plans to spend $1.5 trillion over the next 10 years in community-development efforts that focus on affordable housing, economic development and consumer and small-business lending.

Comments

Why can't Bank of America( Countrtywide) let home owners/customers stay in their homes, if they could efforts to pay what ever they were paying before their rate get adjusted. After the rate adjustment it will raise their mortgage payment to arm & leg,and forclosure will start. My suggestion is to Bank of America is let them stay in their homes, and let them pay what ever they were paying before rate adjustment for a period of 5 to 10 years so that home owners could find a better solution to their problem. Foreclosure is not going to help Bank of America nor the customers.
Please think about it. I appreciate your concern.

Anonymous in Arizona

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If Countrywide/Bank of America were to let homeowners stay in their homes and continue paying the "teaser" rate, why would anyone else pay their new rate after the adjustment? Don't get me wrong, as I have to admit that underwriting standards got way too lose, but some ownership does fall on the individual borrowers. What did they think would happen when their rates adjusted? Did they not read their disclosures? It is a tough situation for all involved. Another aspect to this is that whomever owns the mortgage loans (Countrywide might be servicing, but the loans owned by another entity) bought those loans thinking they would receive payments at the new rate - not the teaser rate for another 5-10 years. In many instances, the "teaser" rate is actually a neg am loan, meaning that the amount of money they own on the loan continues to grow... and at the same time, propertry values are declining. Basically, the longer the person lives there and has that loan, the worse their financial situation gets. There is no easy answers to the problems facing the homeowners and the investors of these loans.
Countrywide Mortgage will most likely continue to operate as is, they will just be operating under a federal bank charter as oppossed to under state banking department rules and regulations. The transitition should be seemless to the public.

Just Think About It

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The banks have brought this crisis onto themselves. The subprime FICO is typically

Anonymous

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It's funny how as I lost my job as a senior underwriter with Hell's Fargo because I refused to approve subprime mortgages which had fraud written all over them. They allowed AE's to underwrite loans and borrowers to provide verifications! What a joke! I hope that they stop hiding their bleeding behind the cooked up numbers they provide Wall street and come clean. It's no secret that they're hurting just as bad as Countrywide but hiding it well. Just visit their empty mortgage hq in IA or ask their CEO who retires this year and make sure you have an umbrella and some disinfectant when he answers!

letty

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my question? why are the banks accepting short sale on a property at about %40 percent lower and sale it to another people ,when they should instead try to do that adjustment with the owner of that property so they can make payments on the real value of the house and keep the property that they were making payment all those years, but you won't allow that adjustment and put those people on the estreet. thats sad.think of a better solution and help.

Sandra

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1) Countrywide services 80-95% of the loans they make. They also buy other loans in the secondary market to keep and service.
2) ARM rate adjusments have been frozen for 5 years by almost every major lender to help homeowners.
3) You cannot speak for other people. How can you say nothing will ever happen to you or your family in your entire life that will cause you to stopping paying your bills. It happens to the best of people everyday. Cancer, car accidents, loss of job, death of child, death of spouse, etc. There are so many ways you can lose everything in 6 months. Think before you speak.
4) Cash for keys program is for everyone. Many times the person left in the home is a tenant and the landlord stopped paying the mortgage, even when they paid rent. The lenders would like the home back without trouble and costly repairs - hence cash for keys to all who will leave according to a signed contract with terms. It saves the bank big money on each home.
5) This is not just a subprime crisis. Get educated! News media is great at making stories and you all buy it! Now everyone is walking away even with perfect credit because they just don't feel they should have to pay a mortgage if others don't. It takes a village to make this mess, it takes a village to build it up again. Stop acting dumb and work together.
In Southern California our housing market has been back, since March and selling in days of coming on the market, with multiple offers - but the media does not want to report the good. Go after them for keeping facts from you! Good news will get our economy rolling again and save many homeowners.

ken

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that must be why countrywide took bonus structure away from their landsafer national default department, to burden some of the loss that the subprime full spectrum division caused.

Daniel

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Once a dirtbag, always a dirtbag, pay your mortgage payment on time.

John

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Hey Daniel:
Wise up will you? You sound like one that doesn't have a mortgage but yet will throw stones at others.
Have you ever heard that the economy is falling on hard times due to losses in mortgages, job losses, and high gasoline prices?
I guess you don't listen to the news...

Sidney

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So what happens to the stand alone Countrywide Mortgage shops located all over the place. Are they going to shut down or keep operating under the same name?

Talon

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Paying people $2000 to cooperatively leave their homes that they haven't been making payments on is crazy. They have to have been in default for 6 months before the whole process can conclude AND they get $2K. What a scam! And they say the big companies are to blame for this mess. Here's a thought. Buy what you need, not what you want. Borrow only what you can afford to pay back. And lastly, keep your word and pay back what you promised you would. That's called honesty and integrity. Hello! Who holds the public accountable for their own actions?

Mike

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Just Think About It is correct. Years ago the mortgage industry wouldn't accept making a little less money when there was all of those sub-prime, unqualified people to exploit. The price of your house and now your taxes are higher, while they sail the seas.

geoff giles

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Take the time to read the pooling and servicing agreement which governs the relationship between the SERVICER and the TRUSTEE of the pool of mortgages. It provides a percentage of the monthly payment can be kept for servicing the loan, but that junk fees like late charges, phoney inspections etc. is kept the by servicer, hence an open door to overcharges. Now that the servicers are being squeezed, the temptation to charge more and higher junk fees is enormous. Too tempting to be resisted. Unless the securitization system itself is abolished, the country will never get to the bottom of the rabbit hole.

Anonymous1

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This is an financial industry greed problem where collateral was secondary and credit scores were king. The models created by the gurus on wall street worked as long as the economy was robust. The banking community essentially lowered real property appraisal fees to the extent the bottom feeding appraisers got the work and the banker got their value. It wasn't 1.5 years ago the banking community said their portfolio losses were minimal and appraisals/collateral values were not as important to warrant accurate appraisals. They were focused on credit scores and that was it. This problem would have been significantly reduced if credit was based on ability to pay and value. If you remember, these are the same people loaning 130% on the value of your home as a home equity product...Go figure...

Jason

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Banks should let borrowers pay the teaser rate that they have been paying so they can stay in their homes and gradually increase the rate from a quarter to a point every year for a period of 5 years so borrower can cacth up while waiting for the economic pick up and the market stabililize. Foreclose their homes, kick them out will not help anyone.

Dawn

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Daniel, I really hope no one in your family ever gets sick or loses their job, because I guess that would make them a dirtbag, right? Do you even have a mortgage???

robert

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I researched adjustable rate loan before I refinanced. The rate never went over 6% since the early 60s. It funny how the Fed allowed this to happen. I sounds like they manipulated the public and loan institutions.

Judy

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They are offering the 2000.00 in hopes that the people will not tear apart the house and leave it in livable condition

UW of the day

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What a great ideathis will REALLY bring the investors back to the tablecant make your payment ?? no problem-pay a third of it-this whole debacle will be fixed before you know itwe have some really great minds fixing this mess-one more thought- If the entire United States is a declining marketif EVERY HOUSE is in a declining market- are we REALLY in a declining market ??? hmmmmmmmmmmmmmm

Beth

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Sandra, You posted "my question? why are the banks accepting short sale on a property at about %40 percent lower and sale it to another people ,when they should instead try to do that adjustment with the owner of that property so they can make payments on the real value of the house and keep the property that they were making payment all those years, but you won't allow that adjustment and put those people on the estreet. thats sad.think of a better solution and help. "
Why should the banks offer folks a huge value discount just because the market has changed? Were you advising homeowners to fork over their obscene profits of the past 3-4 years to those less fortunate? We live in a free market economy (?) which often translates into "dog eat dog" mentality. Hopefully, the people losing their shirts now will learn from their pain and not make the same mistake next time around. Here in Southern California I don't see most people losiong their homes because of the loans. I see many of them have taken out seconds or equity lines to buy cars, boats, granite counters, swimming pools, etc. It's time to stop treating homes like checking accounts.

MERE

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I am a tenant in a home that will be auctioned next week. i need to know phone numbers on how i take advantaged of the cash for keys program. I only have a part time job and cant afford to move. I tried getting a second job and asking my current employer for full time but it just isnt coming fast enough. can anyone help? The house is thru countrywide and every time i call they act like they dont know what im talking about..

THIS IS SUCH BS!!! BANK OF AMERICA IS THE WORST LENDER TO DEAL WITH!!! We were approved for a Loan Mod, went thru all the trial periods and what not; every 2 weeks I called, got a new customer service rep who didn't know crap about the business, and was told oh, you will be receiving your loan mod papers in the mail any day now. Called back, "oh we are a little behind, you should have them within 2 weeks". Nothing....a year goes by when sure enough...January 2011 we receive a letter, "You do not qualify for a loan mod and we are foreclosing on your home" WHAT??? So we get a negoiator to help us....SHE NEVER ANSWERED HER PHONE OR CALLED US BACK! BANK OF AMERICA - YOU CAN HAVE YOUR HOUSE.....SO F OFF!!!!!

I have no sympathy for the big banks, so I think people should just continue walking away from these mortgages when they have to; I don't see anything unethical about doing that. If selling the home won't cover the pay off on your mortgage because values have dropped, or if making your payments no longer makes sense because your home has lost so much value that your balance is way higher than the home's value, then I think it only makes sense to stop paying and voluntarily give back the collateral. After all, the terms of the loan dictate that if you don't pay, they get their collateral back. So, I would just give it back. Doing so is fair since you technically are honoring the terms of the deal. Besides, the borrowers took the loan based on the idea that the home was worth what was being borrowed. Those values were inflated due to bad lending policies that created demand that should have never existed and would not have existed in a responsible lending environment. So, wouldn't the banks be mostly responsible for the circumstances? Should the borrowers have known better than to buy something that was way overpriced? Should they have understood their economy well enough to know that those values were unsustainable? Sure, and the banks should have, too. So, the borrower shouldn't belly ache about having to give the house back, and the bank shouldn't belly ache about having to take it back. It's a business deal gone bad, plain and simple. No good business person would continue pouring money into a failed business venture, so no borrower should be expected to either.

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